Getting a Handle on Your Family Finances (Part 1 of 2)

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Offering his expert advice on money management, radio host Dave Ramsey explains how couples can avoid conflict by negotiating a budget, and how they can teach their children wise financial principles. (Part 1 of 2)

Opening:

John Fuller: On today's "Focus on the Family" Dave Ramsey has some advice for you, especially if you're having some financial difficulties.

Excerpt:

Dave Ramsey: Guys, you need to step up. She needs an extra three to six non-sexual hugs a day. Some of you guys need to look up "non-sexual." (Laughter)

End of Excerpt

John: Well, now that's relationship advice and it's coming from a financial expert, but that intriguing combination is what we're featuring for you on today's "Focus on the Family" with Focus president and author, Jim Daly and I'm John Fuller.

Jim Daly: Hey, John, the past few years have been quite the financial roller coaster for most people and I would say especially for families and small business owners. And that has had a big impact on marriages. We're hearing it from folks who are writing and talking to us about where they're at. Research shows us that money troubles and disagreements can be a major contributor to serious marital problems.

So, today we thought we'd share some insight on money and relationships from one of the best, Mr. Dave Ramsey. He's an author, radio show host. You probably have heard him on the radio and he's the creator of Financial Peace University, which is a nine-week program to help you get to financial health.

John: And the message we're about to hear is from the third week of that series, where Dave talks about two primary money personalities--the "nerds," who are very organized and the "free spirits," who just want to have fun. Here's Dave Ramsey on today's "Focus on the Family."

Body:

Dave: In this lesson, we are going to be talking about relating with money. I want to tell you an old story. I'm sure it's not true, but it's funny and it makes my point, so I'm gonna use it anyway. (Laughter)

There's a story that's told of George Bush Sr. and probably the best First Lady that we've ever had, his wife, Barbara. And they were campaigning their way across Texas in one of the presidential campaigns. And of course, that's their home state, so they knew everybody. And the presidential limo with the SUVs and the whole bit, pulls up to a gas station because it's running out of gas.

And so, the gas station attendant sees all of this and he runs outside. And off course, you and I don't get this service, but he runs outside and he starts pumping gas, 'cause he wants to say he's pumped the gas in the presidential limo.

Well, Barbara looks up and recognizes the guy, jumps out of the car, runs around the car, gives him a big hug. They stand back there [and] yak it up for a little while. And she gets back in the car in a few minutes and George says, "Who was that?" And she said, "Well, that was my old boyfriend in high school." (Laughter) And George gets this big grin on his face and he said, "Now let me get this straight. You are married to the most powerful man in the world—the President of the leading economic force in the world, the United States of America. You could have married him and then you'd be the wife of a gas station attendant." And she said, "Oh, George, don't be silly. If I had married him, he'd be President."

Audience: (Extended Laughter and Applause)

Dave: Proverbs 31 says, "Who can find a virtuous wife, for her worth is far above rubies. The heart of her husband safely trusts her and he will have no lack of gain." Interesting. Let me introduce you to my wife, Sharon Ramsey.

Audience: (Extended Applause and Cheers)

Dave: As you can see, I'm an excellent salesman. (Laughter) But Sharon and I have an agreement. She has agreed to stay married to me if I don't ask her to do public speaking. (Laughter) So, she gets to come out here and just say hi this way and get to meet you guys, but I wanted you to see the reason for my success. Thanks. (Applause and Whistles)

When we're dealing with money in relationships, when we're dealing with money in our personal lives, when we're dealing with money in our families, the flow of money in a family represents the value system under which that family operates.

Jesus said it this way. He said, "Where your treasure is, your heart will be also." So what you do with money screams loudly who you are. Larry Burkett used to say, it's kind of the checkbook autobiography. Back in the days when we used to keep a checkbook or if you keep it on Quicken or something, if you look at your checkbook register, where your money goes tells us what's important to you. Tells you what's important to you.

And men and women are different in how we process this stuff. We're different in how we process everything. And money is no exception to that statement. Gary Smalley says, men love to share facts; women love to share feelings. Men connect by doing things. Guys go hunting together. We do things together. We work on the car together. We do whatever; we do things together. Women connect by talking.

Guys can hang out all day. My son and I drove 2 ½ hours after a football game home and didn't say a word and we were perfectly okay with that. (Laughter) Women would have thought that was psychotic. (Laughter) We operate differently. We're perfectly okay with these differences, too.

Dennis Rainey, who is a Christian family counselor, he says that women and men have a different verbal level. Men speak 30 to 50,000 words a day. Women speak somewhere from 50 to 70,000 words a day with gusts up to 125,000. (Laughter)

We are different. Gary Smalley says, men tend to be controlling. Women tend to remain agreeable. Women would say, "Amen." Men tend to be independent. Women tend to be inter-dependent. All these differences come up big time in the way we handle money and the way we interact.

And so, we've got to take this into consideration if we want to have financial peace—two words that don't go together. When it comes to the emergency fund, men say, it's boring; it's not sophisticated enough. "I could do something better with that 10 or $15,000," in Baby Step 3, which is a fully funded emergency fund of three to six months of expenses. "I could invest that in a good mutual fund or somethin'. But Dave says just to put it in a Money Market account and it not make much money. That's boring; it's not sophisticated enough."

Women on the other hand say, it's the most important key to our financial plan. I need all the men in the room to stand up, please, all the men to stand up, please. Thank you, men. Now guys, if you're married or you ever hope to be, listen to me really carefully for a minute.

I don't know if you know this or not, but as we've been discussing, men and women are different and that's a good thing. And they're different in how we look at this emergency fund thing. There are two things we're going to teach you while you go through Financial Peace University that will revolutionize your marriage if you allow it to.

One of them is the emergency fund and the other is doing a budget. And we're gonna talk about both of those things tonight in the context of singles and in the context of a marriage situation. So, guys, what I gotta get you to understand right now is, somewhere right down in here, your lady has a gland that you don't have. It's called "the security gland." (Laughter) And if she is feeling insecure because of the money situation, that gland spasms (Laughter) and it is attached to her face. (Laughter) So, an emergency fund is actually an investment in a pretty wife. (Laughter) Her face relaxes, because her security gland relaxes.

When you have 10 or $15,000 in the bank and you know that you're not gonna touch it and she knows that you're not gonna touch it, you don't even touch the emergency fund for emergencies, it allows her to relax in a place you don't even have. Am I right, ladies? (Cheers and Applause) So, the message, guys, is you don't have to get it, you just gotta get it. (Laughter)

When it comes to going shopping, men get good deals by negotiating. I can go in; I want those deals. I'm gonna use all my techniques and I'm gonna get in people's face. I'm gonna do whatever. I'm gonna negotiate. I'm gonna get a deal. We get good deals by a lot of times just straight old-fashioned confrontation.

Where ladies tend to get good deals by hunting and hunting and hunting (Laughter) and hunting and hunting (Laughter) and hunting. And they forgot what they were looking for (Laughter), but they're still hunting. (Laughter)

I mean, what's up with that? I don't understand how that works, but that's how it works, isn't it? And Smalley talks about this. He says, here's how a shopping trip looks like for most people.

You know, we get out of the car and we go to this mall together or we're going somewhere. We're going to go get something together, right? And the guy gets out of the car and says, "Identify the target." (Laughter) You know, we're gonna get our hand-held GPS and map out the quickest way to the store. And we're gonna go straight to the store with the best deal, having searched on the Web while we're on our way, for efficiency.

And we get in there. We get the best deal. We analyze which line is going the fastest and in the cash register. We get in line. We go through the most efficient line; we're back to the car. Let's time it; go "click." (Laughter) Identify the target.

And the lady goes, "Whoa, whoa, whoa. You just don't get this, do you?" (Laughter) See, we're supposed to enjoy this process. It's not just about the task; it's the process. We have to go in every store. We have to touch everything (Laughter) in every store. We have to try a whole lot of it on, buy most of it (Laughter), discuss the checkout girl's family problems with her as we're going out (Laughter). And then tomorrow, we're gonna bring most of it back. (Laughter and Applause)

So Sharon and I figured this deal out. We're not gonna try to swim upstream, okay? We know that we're not going shopping together and have a good marriage. That's not gonna happen. But we have figured out, she's really good at hunting and hunting and hunting. She'll go through Consumer Reports. She'll search on the Web and look at E-Bay. And she'll go find the best deal over here and the best sale over there.

And then, I'm really good at negotiating, so much so, that when we go out, she's kind of a sweet, you know, Southern belle little lady. And she doesn't like to be embarrassed. And we go into some of these stores and me and my $100 bills out and she goes, "You embarrass me." (Laughter) You know, well, that's just one of the side benefits of this negotiating thing. (Laughter) So we just don't even try all that.

What we figured out is, she hunts it down, then I go kill it. (Laughter) So, we're gonna work with these opposites thing and make it work.

When it comes to financial problems, we see the difference in men and women. When we're struggling financially, if you're hurting and you're stressed out, you're behind on the bills, you know, the guys lose self-esteem. Men lose self-esteem, because money represents a scorecard to men. So, ladies, listen carefully. If you're in here and you're married or you're in a marriage situation and you're struggling financially, your guy does not feel like Sir Galahad right now. His sword is a little rusty. He has some moss on his armor. And the last thing he needs in the middle of that is a barking Chihuahua around his ankles. (Laughter) "My mamma said, bah, rah, rah, rah, rah, rah. Rah, rah, rah, rah, rah." He may find one last use for that sword. (Laughter)

Guys, you need to look at this. When you're in financial trouble, women face fear. Sharon made us change this. She said the word is "terror," because money with ladies, as we said, represents security. There's that security gland. So, if you're in here and you're struggling financially, don't let the stress of those financial things take your marriage. Guys, you need to step up. She needs an extra three to six non-sexual hugs a day. Some of you guys need to look up "non-sexual." (Laughter)

This is touch that's not going anywhere, touch for the purpose of reassurance, touch that says, "When we got married, we didn't have anything. If we go back to not having anything, that'll be okay as long as I'm with you. I don't want to lose everything, but if I do, as long as we come out of this together, we're gonna be okay." Touch says that and you need to say that out loud, guys, 'cause she's afraid in a place you don't have at that moment.

She's not weaker than you. They're actually more resilient, ladies are, in financial stress than guys are in a lot of ways, but they need that touch. They need that reassurance as a part of the program. So, step up gentlemen, in that situation.

Program Note:

John: Some good basic marriage advice from a financial expert, Dave Ramsey on today's "Focus on the Family." And in a few moments, you'll hear his answer to a very common question about financial struggles in marriage: Who should make the financial decisions in our household? By the way, you can get Dave's book, The Total Money Makeover when you call 800-A-FAMILY; 800-232-6459. Or find it at www.focusonthefamily.com/radio. Let's return now to Dave Ramsey on today's "Focus on the Family."

End of Program Note

Dave: Now the No. 1 cause of divorce in North America today is money fights. Money is the one thing people say they argue about the most in marriage according to a Stanley and Markman study. Seven out of 10 couples disagree about financial issues, according to an article in USA Today. Fifty-seven percent of divorced couples said that financial disputes were the primary reason they did not get along, according to a study done by Citibank. It's the No. 1 thing that breaks up marriages. Hear me again, the No. 1 thing that breaks up marriages—money problems and money fights.

If it's the No. 1 problem, then it's also what Larry Burkett used to say: it's the No. 1 opportunity in our marriages to take them to a better level, to take a good marriage and make it fabulous, to take one that's struggling and looks like it's not gonna make it and bring it back together and let it heal. And you can do that through stuff like doing a budget? Like agreeing on our spending, because when we agree on our spending, again, we're agreeing on our value system and that is absolutely vital.

See, the deal is this. When you get married, what happens is, you know, the preacher lies to us, doesn't he? He says, "And now you are one." You remember that? (Laughter) Do you remember the first year? (Laughter) "Yeah, your mamma's ugly, too." (Laughter) You remember the first year, right?

See, so what we did, we go down the aisle (Singing), "Dun, dun te dun, Dun, dun te dun," right? And the preacher comes down and he says, "Okay, we're going to tie the knot," right? Well, when we get ready to tie that knot, the problem is, stuff gets in the knot, doesn't it? And you grew up in a household where your parents spent everything they made. And she grew up in a household where they saved everything they made.

And that was cute when you were dating. (Laughter) And it's not cute any more. It becomes a potential destructive force. There's a knot goin' on right there in the money. And it's, "I want to save money." "I want to give money." "I want a new washer and dryer." "I want a Bass boat." "I want to go on vacation." "I'm worried about retirement." "Dave Ramsey said …" And we get all of that in there, right? (Laughter) Every bit of that's in there, right? And you get this whole thing goin' on.

But what we have discovered is this. If you will sit down together, if you will learn to work together, agree on your spending, because when you agree on your spending, again, you agree on your value system, you're agreeing on your goals. You're agreeing on your dreams. You're even agreeing on your fears.

And so, when you agree on all of that, what happens is, the budget takes all the knots out of your marriage and you get oneness in your marriage and unity. (Applause)

So, who does the financial decision-making in your household. Who's supposed to do it? Somebody will say, "Well, the man should do it." And other people say, "Women are much smarter; they should do it." The truth is, both of you should do it. Both of you should do the financial decision making. Both of you have to. The one with the natural gift for details can prepare the budget, but the decision making should be done by both of you.

Now typically, not only do opposites attract in the sense of men and women are different, but opposites attract in other things, too. One of you is late for everything and the other one is on time. (Laughter) Yeah. It's that way at our house. I have to be on time for everything. I'm like the nerd of the family, right?

My wife, it doesn't matter. She'll get there some time. It's okay. And you know, when our kids were little, we lose our religion getting ready for church. (Laughter) I'm like, "By the time we get there, Jesus is gonna be gone." (Laughter)

And one Sunday, she used this line that Steve and Annie Chapman, friends of ours, that do ministry to the family--Steve's got a great sense of humor--and she used it on me. She said, "This Sunday, why don't we trade places? You get the kids ready and I'll go out in the driveway and honk the horn." (Laughter)

Opposites attract. One of you's in here burning up right now and the other one's freezing to death. [Did] you ever have those thermostat wars at your house? "It's not cold!" "Yes, it is." "It's not cold." "Yes, it is" and back and forth, back and forth.

Opposites attract.One of you's a spender; one of you's a saver and that's a good thing. You need each other. You spenders need a saver in your life, so you don't retire and have to buy that cookbook, 72 Ways to Prepare Alpo and Love It. (Laughter) You savers need a spender in your life, so you have a life. (Laughter)

And typically, what happens is, the nerd—the one that is very organized, you know, the detail person, the underwear drawer is folded, must be on time, everything has a place, really enjoys for the bills to be paid on time. Late? Oh, don't give me a late charge. Oh, oh, oh!

So, the nerd likes doing the budget. (Laughter) It gives them the sense of power, the sense of control. Some nerds are real big-time control freaks, but all nerds are at least a little bit a control freak. You know what I'm saying?

So what happens is, the nerd and the free spirit get married, but they don't really become one, do they? (Laughing) No, instead we start this fight thing; well, the first thing that'll happen is, the nerd goes, "Oh, no, I've married one of those." (Laughter) And what do you do? You know, we go up on the mountain and we talk to God about the budget. (Laughter) And we come down from the mountain, having prepared the budget on a stone tablet. (Laugher) A little bit of a sunburn, like Charlton Heston.

And you know, we come out and we come to the free spirit and the rest of the family. We say, "Family, I've been talking to God and this is our budget." This is what we nerds do, isn't it? And the free spirit goes, "Yeah, I'm going to the mall to bust your budget." And the nerd goes, "Oh, no! No!" And we nerds, if we're not careful, we're like running out with a pooper scooper, all the time tryin' to clean up your all's messes." (Laughter)

And the free spirit's goin', "You are a freak, you know. Get away from me, you fruit loop." You know and this fight, this constant tension. Some marriages go through this. This is where the world is, isn't it? Say yes.

Audience: Yes.

Dave: Some marriages go through this for decades and don't even realize there's all this tension in the air. They kind of just tolerate it or they go to their corners and go, "Okay. You pay your bills and I'll pay my bills. And we're not really married; we're just gonna have a joint venture." (Laughter)

And the nerd's like, "You're too irresponsible." And the free spirit's like, 'You're too controlling." And we're just (Sound of Csh, Csh, Csh!) All this clash of the Titans going on. And it doesn't make for a high-quality marriage. As a matter of fact, we just said this; it's the No. 1 cause of divorce. As opposites attract and men and women are different anyway, when you put all of that in the soup with money, it makes a mess.

But we figured out a way to solve it. It's called "the budget committee meeting." It's your only hope for learning how to communicate. So, here's what we're gonna do. Those of you that are like me and we're the nerds. Raise your hand, nerds. Okay. See, the nerds are like very precise. (Laughter) Right? So, nerds raise your hand again, one more time. Good.

All right, nerds, here's what I want you to do. I want you to do a budget, 'cause if we wait on the free spirits, it's not gonna happen. Let's not kid ourselves, okay? So, prepare the budget, but the basics of budgeting is, you spend every dollar on paper before the month begins. Every dollar has a name before the month begins. You prepare the budget.

Now, then we call the budget committee meeting. Let's cover the rules for the budget committee meeting for the nerds first. Nerd, I want you to take the budget that you prepared and I want you to set it on the table, slide it over to the free spirit and shut up. (Applause) The free spirits, hear 'em? They are sick and tired of your preaching. They are sick of hearing (Cheers), yeah, you got it.

They're sick and tired of hearing Dave Ramsey say it. They're sick and tired of every mistake they ever made since 1962, you know. (Laughter) They don't want to hear any more of your theories. Shut up! It's on the paper; slide it over. You've got a whole lot of opinions. They're right there on the paper. Let the free spirit look at it.

Rule No. 2, nerds, is this is a meeting. It is not a weekend-long budget summit. (Laughter) When you are dealing with a free spirit, you have a 17-minute window. (Laughter) After that, [they] came to the Financial Peace University thing, their body may stay, but their spirit will leave. (Laughter) They're not gonna hang out with you. Their eyes start to cross. They're not getting this. It's not fun for them. They don't enjoy this process. They're only there to have a vote. They're gonna have their vote and they're gonna leave the voting booth. That's it. That's the whole deal from them.

Now listen very, very carefully to me. If you are a nerd, there is one last rule, nerds. Listen very, very carefully. You must insist that the free spirit change some things in your budget. And the nerds are going, "Noooo! (Laughter) We don't want to change anything. It's right! If we change it, it will be wrong." (Laughter) "I did it; it's right. We can't change it!" Listen, nerds. We're tricking them to get them involved. (Laughter)

All right, free spirits, raise your hand. (Yelling and Cheering). All right, did I take up for you? Say yes.

Audience: Yes.

Dave: All right, so listen up, free spirits. You have a couple of rules for the budget committee meeting, too. Rule No. 1, free spirits, you must come to the meeting! (Yelling and Applause) Rule No. 2, you must bring your brain! (Yelling and Laughter) You have to give adult mature input in the meeting. "I want one" isn't covered under that heading. (Laughter)

You look at the budget and you go, "Honey, I think $1,800 might be a little high for green fees when we have $14 for food." (Laughter) And you make an adjustment there, like switching those two numbers. But you can't just go, "I want more money for clothes," okay? "Okay, we're gonna raise clothing by $200. That's fine, Honey. Where's the $200 gonna come from?" "I don't care." "Who are you, the government?" (Laughter) It has to come from somewhere, right? If we're gonna raise a category by 200, we have to lower some others by the same amount. That's how it works. It balances. It's a neat concept, okay?

And Rule No. 3, free spirits, if you will work with your nerds on this, you will have the best quality relationship of any marriage you know. You will run into people everywhere who are in awe of the communication level in your marriage. It will totally transform how you communicate. It will bring a level of unity, a level of oneness to everything that you're doing. And then you'll start to win financially. It's worth it.

But free spirits, there's a phrase that you have been saying. This is your last rule. You can never again say this phrase and you use it all the time. We know you do, especially we nerds know it. Sometimes you say things like, "Whatever you want to do, Honey." (Laughter) Wrong, "cop-out breath." (Laughter) You have to get in the game and place your vote. You both have a vote. We come into agreement. That's called unity. Both place their vote.

Now no just, "You're smarter than me. You take care of it. I'm gonna go over and mess up your plan, though." (Laughter) And that's what free spirits do too often. No, you've gotta place your vote and then when the budget is done, we pinky swear and we spit shake and "This is a lock, Baby." We don't do anything except what's on the budget. That is a promise. That's a contract. And if we're going to do something different than what's on that budget, we have to come back and have an emergency budget committee meeting

Closing:

John: Well, with that, we've come to the end of today's portion of a message from Dave Ramsey on "Focus on the Family" and we'll hear more of his financial wit and wisdom next time.

Jim: I gotta admit, I think Dave really makes this fun. He's very entertaining and yet, he's getting some really solid ideas across, as well. And in our family, I think I tend to be, well, I think Jean and I have some of both. On big ticket items, I can be more free-spirited. "Hey, I bought a frig today," or you know, somethin' like that.

John: Uh-hm.

Jim: Jean's really conservative when it comes to clothing budget and all that. She does not spend a lot, but she can spend in other areas. So, I don't know how that fits in, but opposites do attract. I'm sure Jean and I are opposites in that way.

We hope today's program will spur some healthy financial discussions in your own family. That's the goal. And we'd recommend that you follow up by requesting Dave's book, The Total Money Makeover. And you can do that right here from Focus on the Family. We'll send that out to you for a generous donation of any amount. Let's just do it that way, because we want this help in your hands. And that's also a way that we can say thank you for helping us in the work we do here to help marriages and parents all across the world, so thank you.

John: Yeah and over 200 million people benefit from our radio and TV programs around the world, so if you want to be a part of that kind of a mission and reach, get in touch with us today and make a difference. Call 800-232-6459; 800, the letter A and the word FAMILY or stop by www.focusonthefamily.com/radio .

When you're online, you'll find additional articles and helps, including a great budgeting tool called Mvelopes. We've got details at the website.

Our program was provided by Focus on the Family and made possible by generous listeners like you. On behalf of Jim Daly and the entire team, thanks for listening in. I'm John Fuller, inviting you back tomorrow. We'll continue to hear from Dave Ramsey with financial advice for parents about teaching money management to your kids and he'll have some advice for singles, as well. That's next time, as we have more trusted advice to help your family thrive.

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Guest

Dave Ramsey

Dave Ramsey is a personal money management expert and the popular host of the nationally-syndicated radio program "The Dave Ramsey Show," which is heard by 12 million listeners each week. His best-selling books – including Financial Peace, The Total Money Makeover and More Than Enough – have sold more than 10 million copies combined. Dave is the creator of Financial Peace University, a program that helps people eliminate debt and manage money wisely. He runs a multi-million dollar company, Ramsey Solutions, but he defines his success by the number of lives changed through his message of hope. Dave and his wife, Sharon, have three children. Learn more about Dave by visiting his website, www.daveramsey.com.